In 2017, the volume of new issuances surged 64.7 percent to about 1.5 trillion yuan (about $236 billion), making China the world’s second largest securitization market in terms of new issuance volume, according to a report by Pengyuan International, a credit rating company.

The sharp increase in the issuance of consumption-related securitization was driven by China’s transition to a consumption-based economy and firms’ incentives to diversify their funding sources and lower funding costs through securitization, the report said.

China’s consumption growth and e-commerce development contributed to a rise in consumer loans, which in turn fed consumption-related ABS issuance growth.

The rating agency expects China’s ABS market to continue to grow in 2018, but at a moderate pace.

“Due to the new policies on regulating consumer-loan originations, consumer loan ABS issuance in 2018 might not able to keep pace with the previous year,” it said.

The issuance of transactions backed by commercial real estate assets will continue to increase, driven by favorable policies in the housing rental market and property developers’ incentives to diversify their financing channels, the report said.